French industrial output misses forecasts in January

France´s industrial sector failed to deliver the goods in January amid sharp drops in factory and mining production levels, but economists were sanguine.

Total industrial production decreased 0.3% month-on-month after a 1.1% drop in December, according to INSEE.

That defied forecasts for growth of 0.5%.

Factory output declined 1.0% over the month, while mining and quarrying output shrank 8.8% on the month, with the latter coming on top of a 3.2% reduction in December.

Energy production on the other hand bounced back by 4.4% after a 2.2% drop in the prior month, boosted by weather conditions in the country.

January´s fall in manufacturing output was broad-based, said Tullia Bucco, economist at UniCredit Research.

It was especially marked in the "other manufacturing" goods segment, which alone accounted for a third of the total decline.

Production of food and beverages was also weak, falling 2.1% on the month after slipping by 0.5% in the previous month, although a bounce in the production of transport equipment offered some comfort.

The latter increased 3.1% month-on-month following a 4.1% drop in the month before.

"Today’s IP outcome marks a weaker-than-expected entry into the first quarter, although the less volatile 3M/3M average remains at a still solid 1.0%. In line with indications from manufacturing surveys pointing to healthy demand conditions, we expect that industrial production will rebound firmly as soon as in February," Bucco said.